Covid-19: Challenge for Agriculture

Why in News?

The Covid-19 crisis is likely to pose a serious challenge to agriculture and rural economy.

What are the problems before lockdown?

• Unable to Harvest - There is non-availability of labour and machinery for harvesting, transport facilities, etc.
• Due to this, farmers are unable to harvest and market Rabi crops (wheat, gram), and also fruits and vegetables.
• The cold storages and the markets are closed.
• It can lead to crops wasting away on the field, local distress sales and lower prices for farmers.
• Unable to Earn - Agricultural labour segment (55% of total agricultural workers) is unable to earn a living.
• This is because of movement restrictions and lack of adequate income and safety nets.

What would be the problems after lockdown?

• Immediately upon the lifting of lockdown, there will be large-scale arrivals in the markets.
• This could result in sudden depression of wholesale prices due to excess supply, which could adversely affect farmers.
• This period could witness sudden increase in labour supply due to easing of mobility. This may push down wage rates.
• But the increase in demand may offset this decrease somewhat.
• The net effect depends upon the larger of the two effects.

How rural economy would be affected?

• Farmers are certain to face lower earnings in the Rabi season due to crop losses and a depression of prices.
• Farm labourers are certain to face lower earnings because of movement restrictions and low agricultural activity.
• These, combined with lowered demand for animal products, the incomes of rural population are to be hit very hard.
• The construction sector absorbs majority of agricultural labour in lean seasons.
• A slowdown in this sector will aggravate this crisis.

What policy initiatives are needed?

• Phased lockdown strategy should be planned.
• This is essential because there will be a sudden increase in economic activity after lockdown.
• This could result in ignoring physical and social distancing.
• Overcrowding of FCI centres could be avoided by,
  1. Postponing procurement to the third week of April and
  2. Staggering of procurement within states or districts.
• Immediate direct payments could be made to farmers and labourers.
• The government has announced frontloading of Rs 2,000 under PM-Kisan. This amount may be increased to Rs 6,000.
• A payment of Rs 2,000 may be made immediately to all active MGNREGA job card holders.

What policy reforms could be made?

• Moving away from price and input subsidy-based approach to direct income-based approach is the first one.
• Direct income transfer may be a better policy instrument when it ensures minimum income for farmers and rural workers.
• A well-functioning eNAM could have helped in better price discovery for farmers.
• It could have also helped in maintaining physical distance amongst the actors.

Source: Financial Express